Social partnership is dead, say its critics. If employers, unions and the Government want to resurrect it, they will have to reinvent it, suggests Bill Roche.
Whether there is another social partnership agreement on the expiry of the Programme for Prosperity and Fairness early in 2003, the essential challenge remains the same. A new way will need to be found to link pay bargaining to the competitive and performance challenges faced by enterprises and workplaces.
Whether the social partnership model is retained or jettisoned in 2003 may not be the really critical issue. The real challenge facing employers and unions is how to foster co-operative industrial relations at the level of enterprises and workplaces and to show at these levels the impressive capacity for innovation and improvisation already shown in national-level dialogue and agreements.
This will involve repositioning workplace partnership around higher organisational performance, competitiveness, better public services and mutual gains, as articulated by the recently established National Centre for Partnership and Performance. This challenge merits more attention than the sound and fury of recent exchanges surrounding what may be a dying model of industrial relations.
Commentators have suggested that the PPF was probably a bridge too far in seeking to retain the highly centralised model of pay bargaining current since the advent of social partnership in 1987. In conditions of unprecedented economic growth, near full employment and growing militancy in parts of the public sector, the central pay norms set down in the PPF were effectively dead in the water by early 2001.
In private business, sectors faced with acute labour shortages responded in various ways. Some offered or conceded wage rises appropriate to their labour supply problems, others provided incentives in the form of bonuses, allowances and performance pay or regraded jobs in response to recruitment and retention problems.
In the public sector, where limited scope exists for disguising pay drift, wage pressure tended to focus on the more straightforward issue of demands for higher basic rates of pay.
The US and Irish economic downturns that set in from spring 2001 and intensified following the events of September 11th have allowed the PPF just about to run its course without visibly falling apart. However, experience under the PPF appears to have prompted employers in particular to reappraise the centralised social partnership model and may already have inclined them to disengage from centralised bargaining on the expiry of the PPF and to return to pay bargaining at the level of enterprises and establishments.
Their criticisms of social partnership in the specific area of pay focus mainly on the inadequacy of a "one-size-fits-all" pay adjustment model in a buoyant economy, on what they see as persistent union pressure for pay rises above the terms agreed in the PPF and on their claims that unions and their members have responded to requests for co-operation with ongoing change by effectively selling flexibility at the highest price they can obtain.
Unions in general continue to express a preference for social partnership, but complain that gains in productivity have not been adequately reflected in their members' pay packets. They are also highly critical of the limited extent to which profit-sharing, gain-sharing and related forms of workplace partnership have diffused across industry under the PPF. In the light of these views and assessments, any prospect there may be of retaining social partnership appears to be predicated on the parties' willingness and ability to reinvent the model.
The reinvention of social partnership involves seeking a new institutional architecture to link centrally agreed principles and priorities to pressures and challenges in firms and workplaces in a manner that can respond to the agendas and concerns of both sides. The outline of a possible new pay architecture is only just apparent in the ongoing debate over social partnership in Ireland and might also be found in pay bargaining models in other European countries.
Two-tier bargaining, combining agreement at central and local levels, might, for example, be considered, though experience in Ireland with this concept has been mixed. If ways could be found to tie a second-tier of pay adjustment at enterprise and workplace levels to real gains in productivity, profitability and organisational performance, a viable model might emerge.
Alternatively, should the parties opt to retain social partnership, they could attempt no more that a loose centralised co-ordination of pay adjustment in firms and workplaces.
THIS might be done by gaining central agreement on the criteria governing pay adjustment at these levels and possibly by arriving at an agreed dispute resolution procedure.
In the context of either of these forms of co-ordinated decentralisation, partnership between employers, employees and unions in enterprises and workplaces offers by far the most promising route to reproducing the type of consensus over pay that has anchored centralised partnership for much of the period since 1987.
Should the parties opt to depart from centralised bargaining and social partnership altogether in early 2003, the case for partnership in enterprises and workplaces is scarcely less compelling and may indeed be even more critical. Advocates of decentralised pay-bargaining, including many economists, have failed to deal adequately with the potential downside of this model in Irish circumstances.
In the recent debate over social partnership, one detects a pronounced nostalgia for a return to an alleged golden age of free collective bargaining. Such a view amounts to rewriting aspects of Irish industrial relations history. The last period of decentralised pay bargaining in Ireland spanned 1981 to 1987. In spite of the recessionary conditions then prevailing, employers complained that pay trends were appreciably higher than competitively sustainable.
Public-sector pay appeared an intractable problem area; the level of industrial conflict remained high, given the state of the labour market, and there was little evidence that employers in general were disposed to use the latitude provided by local pay bargaining to change the character of employment relations in their firms.
Free collective bargaining had fallen into disfavour in an earlier period during the 1960s because it had become identified as chronically inflationary and disruptive. Those who champion a return to free collective bargaining will point out that the competitive landscape in Ireland and internationally has changed in fundamental ways since the 1980s.
However, the question remains as to whether a return to free collective bargaining, with few other attendant changes in methods of pay bargaining, promises to provide a pathway to a pay bargaining model for a sophisticated modern economy highly dependent on international trade and foreign direct investment.
In the absence of a social partnership agreement, it again appears necessary to develop a new institutional architecture for pay adjustment, which would couple decentralised pay bargaining with reward and incentive systems built around partnership, stake holding and mutual gains principles.
Such reward systems in turn need to be embedded within a wider set of relationships between employers and employees and employers and unions that identify and support co-operation, involvement and participation as the key to higher organisational and business performance.
It is time for the debate to move on to the challenges involved in building partnership in firms, workplaces and public agencies, with or without national social partnership.
Bill Roche is Professor of Industrial Relations and Human Resources at University College Dublin and teaches at the Smurfit Graduate School of Business